World Bank to Redo Four Years’ Ease of Doing Business Rankings

On Friday, 12th January, The Wall Street Journal reported on how the World Bank had been unfairly influencing its national rankings of business competitiveness going back at least several years.

Acknowledging that the ease of doing business rankings had been unfair and misleading since the methodology of the report was repeatedly changed over several years, World Bank’s chief economist Paul Romer said he would correct and recalculate the rankings going back at least four years.

The former director of the group responsible for the report, Augusto Lopez-Claros, defended the changes to the report over the years. All changes had been made following “extensive internal peer review and the Bank went out of its way to announce these changes to the authorities of its member countries and to other users,” he said. “Preliminary rounds of the new data collected were shared for comment and, in general, the whole process was undertaken in a context of transparency and openness.”

This revelation now brings into question the integrity of one of the most relied upon reports used judge the business atmosphere in a country by ranking a number of metrics such as how long it takes to open a business or electricity cost tariffs.

For countries like Chile which had been the most affected by changes in the metrics used to calculate the ranking, the news that the ease of doing business report will be redone is undoubtedly good news.

To illustrate how changing the methodology could negatively affect a country’s ranking consider this. In 2015 Chile was ranked 33rd in ease of paying taxes, but in 2016 the World Bank added a new metric that measured the time it took for a business to deal with taxes after filling them which made its ranking fall to 120th while there weren’t any adverse changes to its economy.

In November last year, Kenya moved up 12 places in the ease of doing business 2018 rankings to position 80 globally and third in Africa behind Mauritius and Rwanda. Cabinet Secretary for Industry Trade and Cooperatives, Adan Mohammed hailed the ranking adding that the country would be seeking to get to a global ranking of top 50 in the coming years.

“Our improvement starts today for next year. Our target is to be in the top 50 countries in the world in the next couple of years, and we put that target three years ago,” CS Mohammed said in a press address at the National Social Security Fund (NSSF) building.

Now that the World Bank will be redoing the rankings, it will be interesting to see how Kenya fares and whether the report will be greeted with such enthusiasm as the previous ones.